A few years after successfully launching a new outdoor advertising business, Sean Richeson found himself spending 16-hour days running from one appointment to another, negotiating with customers, drumming up new business, signing checks, and checking up as much as possible on his six employees. The founder realized that his own strength was in selling, but general managerial responsibilities were very time consuming and interfered with his sales efforts. Richeson even slept in the office one or two nights a week just to try to keep up with his work. Despite his diligence, however, Richeson knew that

his employees weren’t organized and that many problems needed to be addressed. For example, he lacked the time to set personnel policies or to draw up specific job descriptions for his six employees. Just last week, he had been warned that one employee would sometimes take advantage of the lax supervision and skip work. Invoices often were sent to customers late, and delivery schedules were not always kept. Fortunately, the business is profitable, inspite of the numerous problems.

Question 1 Is Richeson’s problem one of time management or general managerial ability? Would it be feasible to engage a management consultant to help solve the firm’s problems?

Question 2 If Richeson asked you to recommend some type of outside management assistance, would you recommend a SCORE counselor, a student consulting team, a CPA firm, a management consultant, or some other type of assistance? Why?

Question 3 If you were asked to improve this company’s management system, what steps would you take first?What would be your initial goal?

At the end of Chapter 21, read Situation 2 and using the questions as a guide, discuss recommendations.

Jonathan Tandy, owner of a small furniture manufacturing firm, is trying to deal with the firm’s thin working

capital situation by carefully managing payments to the company’s major suppliers. These suppliers extend credit for 30 days, and customers are expected to pay within that time period. However, the suppliers do not automatically refuse subsequent orders when a payment is a few days late. Tandy’s strategy is to delay payment of most invoices for 10 to 15 days beyond the due date. Although he is not meeting the “letter of the law” in his agreement, he believes that the suppliers will go along with him rather than risk losing future sales. This practice enables Tandy’s firm to operate with sufficient inventory, avoid costly interruptions in production, and reduce the likelihood of an overdraft at the bank.

Question 1 What are the ethical issues raised by Tandy’s payment practices?

Question 2 What impact, if any, might these practices have on the firm’s supplier relationships? How serious would this impact be?

Question 3 What changes in company culture, employee behavior, or relationships with other business partners may result from Tandy’s practices?

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